The Indian leather industry, with an annual turnover of over $12 billion, has recorded a cumulative annual growth of about 3.09% in the last five years.
“India is the second largest producer of footwear and leather garments in the world,” said P. R. Aqeel Ahmed, the newly elected Chairman of the Council for Leather Exports (CLE). “We are also the second largest exporter of leather garments and third largest exporter of saddle and harness in the world.”
The major Indian production centres for leather and leather products are located in the states of Tamil Nadu – Chennai, Ambur, Ranipet, Vaniyambadi, Vellore, Pernambut, Trichy, Dindigul and Erode; West Bengal – Kolkata; Uttar Pradesh – Kanpur, Agra, Noida, Saharanpur; Maharashtra – Mumbai; Punjab – Jalandhar; Karnataka – Bangalore; Andhra Pradesh – Hyderabad; Haryana – Ambala, Gurgaon, Panchkula, Karnal and Faridabad; Delhi; Madhya Pradesh – Dewas; Kerala – Calicut and Ernakulam/Cochin ; Rajasthan; Jaipur; Jammu & Kashmir; Srinagar.
Aqeel Ahmed, who will be the Chairman of the CLE for the next two years, elaborated his plans to BE, “The leather industry is a high foreign exchange earning sector. Compared to our imports of certain raw materials and accessories, the conversion to exports is almost five times in value. In view of its immense potential for growth and employment generation capabilities, the Indian government has identified this sector as one of the focus sectors under the ‘Make in India’ initiative. The industry has achieved several milestones, namely, being a) the second largest producer of footwear, b) the second largest exporter of leather garments c) fifth largest exporter of leather goods and the third largest exporter of saddlery and harness items. The industry employs about 4.42 million people, 30% being women. India has also become the second largest consumer of footwear in the world next only to China. The total turnover of the industry is $17.74 billion with exports contributing about $5.74 billion and domestic market contributing around $12 billion.”
In June 2016, the Indian government approved a special package for employment generation and promotion of exports for the textile and apparel sector. The CLE has been requesting the government to extend a similar package to the leather industry. In the Union Budget 2017-18, the Union Finance Minister announced a special scheme for creating employment in the textile sector that has been launched. A similar scheme will be implemented for the Leather and Footwear Industries’. The ‘Indian Leather Development Programme (ILDP)’ which was implemented by DIPP, Government of India during the XII Five Year Plan period 2012-17 with an outlay of Rs. 1145.01 crore ended on March 31, 2017. The DIPP has proposed to continue the ILDP for the next three years and the name of the scheme has been revised to Indian Footwear, Leather & Accessories Development Programme (IFLADP). The DIPP, in consultation with stakeholders has submitted a proposal to the Union Cabinet for consideration and approval for implementing IFLADP for a three year period (2017-2020). The Union Cabinet chaired by Prime Minister Narendra Modi has approved the special package for employment generation in the leather and footwear sector. The package involves implementation of the central sector scheme “Indian Footwear, Leather and Accessories Development Programme” with an approved expenditure of Rs. 2600 crore over the three financial years from 2017-18 to 2019-20.
Aqeel stated the leather industry creates ‘wealth from waste’ as it produces huge value-added products from hides and skins, which are by-products of the meat industry. Also, leather is unique because it is fashionable and durable. He said, “The Government of India has taken a number of measures for overall growth and development of the leather industry. These include implementation of Rs. 2600 crore
Indian Footwear, Leather and Accessories Development Programme (IFLADP) during 2017-20 and providing financial assistance in key areas like capacity expansion and technological up-gradation of production units, skill development and employment generation and environment management. Enhancement of the interest equalisation scheme on rupee export credit from 3% to 5% for MSME units will also prove beneficial. Thirdly, enhancement of duty free limit for import of critical inputs for footwear and other leather products from 3% to 5% of FOB value of exports in previous year and reduction in GST rates for leather industry related items as compared to finished leather from 12% to 5%, for leather goods, leather garments and saddlery and harness items and leather chemicals from 28% to 18%, for CETPs from 18% to 12%, for job work from 18% to 5% and for footwear with MRP above Rs. 500/- and up to Rs. 1000 from 18% to 5% will also prove beneficial."
Penetration in USA and attracting investments
The US is now the largest market for the Indian leather and footwear industry and exports to this country are growing. It is also the largest importing country of leather, leather products and footwear, accounting for about 20% of global imports. Aqeel said, “To tap this market, we are increasing our capacities with the financial assistance of the government under the Integrated Development of Leather Sector (IDLS) scheme and also taking measures to attract overseas investments. Recently, Invest India organized an investment promotion event in China which was attended by more than 400 companies which shows the huge interest among Chinese entrepreneurs to invest in Indian leather and footwear industry. As a follow-up, a Chinese delegation is visiting India during India International Leather Fair (Scheduled in Chennai during Jan. 31- Feb. 3, 2019) for further business meetings with Indian companies.”
Expanding raw material base and design development
R. Selvam, Executive Director, Council for Leather Exports, told BE, “Efforts are being taken to further augment the raw material base by organizing a Raw Material Sourcing meet in Chennai (February 1, 2019) wherein more than 28 suppliers of hides, skins and leathers from eight countries will be presenting their range of leathers to Indian manufacturers and exporters. Besides, a Designers Fair is being organized in Chennai during in February 2019 wherein about 45 designers from eight countries will be presenting their design prototypes.” He added, “About 10 shows are planned in overseas countries during 2019-20, with assistance from the Union Ministry of Commerce and Industry. The industry is looking to achieve greater penetration in potential markets like Japan, Russia, Africa and Latin American countries.”
Aqeel informed that the industry is expecting a 5% to 6% growth in exports during this year (2018-19) in rupee terms. He emphasised that the industry has the potential to achieve higher growth levels in the coming years. Selvam informed that the USP of the Indian leather industry is its large raw material base, strong products industry, and huge labour availability.
Strengths of Indian Leather Sector
l Indigenous raw material source – About three billion square feet of leather produced annually
l Some varieties of goat / calf / sheep skins command premium position
l Strong and eco-sustainable tanning base
l Modernised manufacturing units
l Trained / skilled manpower at competitive wage levels
l World-class institutional support for design and product development
l Presence of support industries like leather chemicals and finishing auxiliaries
l Presence in major markets – Long Europe experience
l Strategic location in the Asian landmass
l Design development initiatives by institutions and individuals
l Continuous modernisation and technology
l Economic size of manufacturing units
l Constant human resource development programme to enhance productivity
l Increasing use of quality components
l Shorter prototype development time
l Delivery compliance
l Growing domestic market for footwear and leather articles